By Justin Toland, Contributing Editor, PPI magazine
BRUSSELS,
Oct. 16, 2008 (RISI) -
A couple of years ago, while at a tissue industry event in Sweden, I met a dynamic young entrepreneur from Iceland by the name of Thórdur Kárason. Never having previously associated that island of ice and fire in the North Atlantic with paper production, what he told me was both surprising and exciting.
Kárason is CEO and general manager of Papco, a tissue converter and manufacturer of industrial wipes, bathroom and kitchen cleaning products based in Reykjavik. He explained that Papco wanted to expand its business into tissue paper manufacturing. Taking advantage of Iceland's enormous geothermal energy resources and its established position on global shipping routes, Papco would build a greenfield tissue mill adjacent to a geothermal power plant and close to a breakbulk and container harbor in Reykjavik. The plan was to import Brazilian virgin pulp and manufacture parent reels of bathroom tissue and kitchen towels for export (primarily to the UK, but also to North America).
With Iceland's financial woes making headlines around the world, I telephoned Kárason to find out what impact the country's banking crisis was having on Papco's plans. "Very little," he says. "It will slow us a bit [but] the whole island has not collapsed." Looking ahead, he remains confident: "The need for tissue will only grow."
It's heartening to hear such optimism in these difficult times. One hopes that the rest of Iceland's business community remains outward looking and open to innovation despite the dreadful consequences of the overreach of its financial institutions.
While the country's short-term prospects are not great, in the longer-term, Iceland has the resources to recover strongly. But future growth will have to be built on firmer foundations than financial services and shopping. Who knows, perhaps there will be a newfound respect for the hitherto unfashionable manufacturing sector? That would be good news for Papco. It would also be a welcome change. A change of attitude toward manufacturing that hopefully will now spread round the world as rapidly as the banking contagion that forced our governments into such a drastic intervention.
After all, it's certainly a lot easier to understand how a bale of pulp is turned into paper than it is to understand a credit default swap, as we have all discovered to our cost.
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